Buy and Hold: How to Perpetuate Your Investment Losses
A recent cartoon in my daily newspaper showed two guys sitting in a bar. One is saying to the other: "I did learn something from my broker...how to diversify my investment losses."While this struck me as funny, there is certainly an element of truth to it judging by the number of tragic e-mails and phone calls I have received over the past couple of years.This was brought home even more so by a reader who responded with strong disagreement to one of my articles. I advocate a methodical, disciplined approach to investing in no-load mutual funds. It keeps me invested during up markets and on the sidelines during down markets. It was exactly this approach that got me and my clients out of the market in October, 2000 and put us back in to take advantage of the April, 2003 upswing.Judging from the reader's e-mail it appears that he works for a major bank and is adamant about Buy & Hold and Dollar Cost Averaging.
Maybe it's the approach he has chosen and he doesn't like hearing that the emperor is wearing no clothes. Nothing personal, honestly, but I find it incomprehensible that anyone, after the bear market and the financial disasters most people experienced, can even consider such theories. The results are just too black & white. Here are his three main points:
- "There is no real feasible way to know whether the market is going to be up or down and when exactly to invest.
- "The only logical way for an investor to make money is through the buy and hold approach. This method is used by Warren Buffett and he has consistently beaten the best with an average annual return of 29%.
- "Dollar cost average helps to hedge against the ups and downs of the market; moreover, one should have been buying up stocks during the last 3 years, though I do agree with your cashing out at in 2000.
I do not wish to insult you, but that seems to me more luck than intuition."
But what about the numerous stories in the press over the past 3 years of the heavy losses he sustained in Coca Cola and other stocks, by stubbornly holding on to this positions. When you have enough money invested in a wide range of holdings, you become almost bullet proof. Do you fit in that category?Furthermore, Buffet has resources available that the investing public simply does not have. Saying that he is successful only because of his buy and hold approach, and everyone following this technique will be too, is an oversimplification and does not factor in all the issues.How many non-millionaires have enough spare capital to keep buying and holding and buying some more while stocks plummet? How long can they wait for the upswing when their cost-averaged holdings will start to show a profit? Do the math! Yes, the market will eventually turn up. But will it recover enough fast enough to reverse your losses in time to do you any real good? If you're 20, then maybe.
If you're 60, who knows?I have received countless e-mails and phone calls from individuals who have been led astray by brokers, financial planners and others using buy-and-hold and dollar cost averaging. Stories abound of retirees having to go back to work just because someone told them that "the market can't go any lower" or "let's dollar cost average."
As for his last point, when I gave the signal to cash out on October 13, 2000, it had nothing to do with either luck or intuition. I had no clue how good of a call that would be; I simply let my indicators be my guide. They pointed to a sell, we considered, and then followed through based on our experience. We held true to our philosophy and kept our emotions, speculations, fears or greed out of the equation.
This disciplined approach is what I advocate.This year it has led us to buy back into the market on 4/29/03. And my detailed analysis and evaluation of a range of funds led us to select some of the best; my top fund being up some 50%. So, not to be cynical, but to me dollar cost averaging is just a way to spread the pain over a longer period of time and to cloud the obvious with the hope the market will turn around tomorrow. After all, it can't go any lower. Can it?.
Ulli Niemann is an investment advisor and has been writing about objective, methodical approaches to investing for over 10 years. He eluded the bear market of 2000 and has helped countless people make better investment decisions. To find out more about his approach and his FREE Newsletter, please visit: www.successful-investment.com. ulli@successful-investment.comOffshore Investing
Offshore investing: spreading risk helps sleepThe world's economies still dance to different tunes and have different boom and bust cycles that tend to offset each other, even though the differences are getting smaller. As a result, international stocks can provide diversification for a portfolio heavy in U.S. stocks.Between June 1997 and October 1998, for example, Japan's Nikkei index lost almost 40%, but European markets did well due to continental economic union. U.S.-style corporate restructurings also began to pay off. One region's success balanced the other's failure to get its financial house in order.There has been less divergence between regions more recently.
Even so, we suggest the prudent investor cannot afford to ignore overseas markets. They now represent some 44% of world market capitalization, up from 25% about 30 years ago. International stocks can provide solid diversification for a portfolio heavily invested in U.S. equities.Exchange rates add an extra flavor...
Offshore Investing
Hedge funds > Offshore Investing
Tips for an easy card processing
By Soli Katir
www.credit-card-magazine.com
Most businesses conduct their transactions with the help of credit cards. Moreover, personal transactions could also be carried out through the use of credit cards. Credit card has become very essential for shoppers since it eliminates the need to carry a large amount of cash. It gives convenience both to the customer and the seller because transactions can be done any time you want it. It helps in managing your money easier and can be especially used during emergencies.
Using credit cards on online transactions boost your business profit against your competitor.
Here are the three key elements needed for credit card processing:
1.
Payment gateway - combination of secure software and hardware that transmits payment information from customer to merchant, provides interface, credit card processing, billing, reporting and operational services.
2. Internet...
Hedge funds > Tips for an easy card processing
Lower Upset Amounts at Some New Jersey Sheriff Sales
(ContentDesk) March 26, 2006 -- In my recent travels I have been reviewing the results from past sales in a few different New Jersey counties. Two counties in particular showed that some properties are selling for less than the advertised judgment amount in the Public Notice.This is a very different story than what we were seeing just a few months ago. Now I am not talking about 20-30k less, but a few thousand is enough to notice a change in market conditions. Not to mention the recent proactive effort by most lending institutions. Did you know that most banks, for one of the first times in history, are calling up the homeowners and trying to make a deal with them before it gets too bad? In fact GMAC has just funded an entire organization to assist with homeowners in trouble.
It is called http://www.995hope.org/ . Press Releases say that GMAC contributed about 20 million in seed capital funds to get it going.What does all this mean? Well Im not actually sure at the moment, but...
Lower Upset Amounts at Some New Jersey Sheriff Sales
Hedge funds > Lower Upset Amounts at Some New Jersey Sheriff Sales
Offshore Markets - Looking Better All The Time!
The World's Market Capitalization is ShiftingEmphasis in major market capitalization is shifting away from established industrialized countries toward emerging markets.US market dominance has dramatically declined. The present tendency in the US to excess equity market valuation will accelerate the movement of capital to more attractive emerging markets. Share valuations in Asia, often at 1 1/2 times book value, compare most favorably with characteristic multiples of 6 for similar companies on the US market. Major US pension funds, e.g., CALPERS, are in high gear to diversify internationally by direct investment in emerging market growth companies.It will be some time before confidence in the Japanese capital market fully returns.The less liquid European equity markets, compounded by economic Uncertainties, remain unattractive.The move of investment capital will clearly be toward the emerging economies of Asia, Eastern Europe, and Latin America.World Economic Opportunities are Moving...
Offshore Markets - Looking Better All The Time!
Hedge funds > Offshore Markets - Looking Better All The Time!
Bankruptcy and Insolvency Laws Could Drive Venture Capital Markets
John Armour and Doug Cumming of the Centre of Business Research (CBR) say the link is true when applied to bankruptcy laws, and is as important a factor as economic conditions and buoyant capital markets.
They say the finding is significant, given that it was thought previously that the depth and liquidity of the stock market was the overriding factor. "Favourable tax and legal environments help the establishment of venture capital and private equity funds and increase the supply of capital," said a report produced by the pair. "Similarly, temperate bankruptcy laws stimulate entrepreneurialism and increase the demand for venture capital," they added. For their study, Armour and Cumming carried out an international comparison of the legal and tax regimes in 15 countries over 13 years, and found that investor friendly regimes had a good supply of, and demand for, private equity.
An investigation of each country's bankruptcy laws showed that those with tighter regimes, like...
Bankruptcy and Insolvency Laws Could Drive Venture Capital Markets
Hedge funds > Bankruptcy and Insolvency Laws Could Drive Venture Capital Markets
Channel 933 and The Mighty 1090 Raise Funds to Help a San Diego Boy Learn to Walk
San Diego, Ca (ContentDesk) November 10, 2005 -- San Diego radio stations, corporate sponsors and families all
pitched in to help raise funds for The Dream Factory and Patrick Ivison, an 11 year old San Diego boy. Patrick was accidentally hit by a car when he was only 14 months old and has been confined to a wheel chair ever since. BUT, he wants to learn to walk.The Dream Factory recently granted Patrick his first month's tuition at Project Walk in Carlsbad Ca. Even though his mom Jennifer knew that the three year tuition (over $90,000 and none of it covered by insurance)was going to be tough, a grass roots campaign was started by her with garage sales and other local fundraisers. People from all over the world have now seen Patrick's story in the San Diego Tribune, CBS-TV National News and at www.helppatrickwalk.orgThe Bowling for Dreams fundraiser was attended by Scott & BR from the Mighty 1090, The San Diego Gulls Hockey players and AJ from AJ's Playhouse on Channel 933.Patrick's...
Hedge funds > Channel 933 and The Mighty 1090 Raise Funds to Help a San Diego Boy Learn to Walk
Soy Wax Candles and Candle Making
Candle making is an extremely popular pastime in America and abroad. Recent statistics have shown that the industry, as a whole, is currently undergoing a significant growth phase. Overall sales of candles and candle-related supplies are well over 3 billion dollars per year right now. Who would have thought that our beloved hobby would ever spawn such a profitable industry?
While some companies are moving fast to capitalize on the growth of the industry many of us are content...
Hedge funds > Soy Wax Candles and Candle Making
A Guide to Memory Foam Mattresses
The problem with many mattresses is that they just don't fit your body. They are either rigid and resist the curves of your shape or they are overly soft and "give way" beneath you. The memory foam mattress was created in answer to this problem.
Memory foam is a material that is designed to be "viscoelastic." This means that it will conform to your body, but it also has the ability to return to its original shape if forced. This material molds to the body, offering support and...
Hedge funds > A Guide to Memory Foam Mattresses
Hedge funds pool table Buy and Hold: How to Perpetuate Your Investment Losses